The Spanish-led consortium responsible for building the third set of locks to expand the Panama Canal says it has signed an agreement with the Panama Canal Authority (ACP) that will ensure the completion of the project, ending a three-month billing row that threatened to leave the project in limbo, according to Shipping Gazette.
The deal took longer than expected as the ACP and the consortium, Grupo Unidos por el Canal (GUPC), had announced a tentative deal on a path forward on February 28. Canal administrator Jorge Quijano was expecting a final agreement to come on March 6.
Under the agreement, ACP will advance another US$100 million to GUPC (which is also committing $100 million of its own) and extend the repayment deadline for $784 million in previous loans, possibly until 2018, reported the American Shipper.
Zurich North America, the insurer backing the GUPC's $400 million performance bond, also has allowed the bond to be used to backstop new construction loans.
The agreement calls for the remaining 12 lock gates to be delivered from Italy to Panama in stages by December. Four gates have been delivered so far.
GUPC claimed it faced a liquidity crisis because of the $1.6 billion in cost overruns on the project that prevented it from paying contractors and labourers.
Work on the project had slowed to a crawl in recent months and even came to a complete standstill for several days as the talks ended in gridlock.
GUPC has committed to complete the project in December 2015, 14 months behind the original schedule. The expanded canal will not open to maritime traffic until the first quarter of 2016 at the earliest because the locks are to undergo testing and canal personnel must be trained.
The Panama Canal expansion project is less than three-quarters complete.
The deal took longer than expected as the ACP and the consortium, Grupo Unidos por el Canal (GUPC), had announced a tentative deal on a path forward on February 28. Canal administrator Jorge Quijano was expecting a final agreement to come on March 6.
Under the agreement, ACP will advance another US$100 million to GUPC (which is also committing $100 million of its own) and extend the repayment deadline for $784 million in previous loans, possibly until 2018, reported the American Shipper.
Zurich North America, the insurer backing the GUPC's $400 million performance bond, also has allowed the bond to be used to backstop new construction loans.
The agreement calls for the remaining 12 lock gates to be delivered from Italy to Panama in stages by December. Four gates have been delivered so far.
GUPC claimed it faced a liquidity crisis because of the $1.6 billion in cost overruns on the project that prevented it from paying contractors and labourers.
Work on the project had slowed to a crawl in recent months and even came to a complete standstill for several days as the talks ended in gridlock.
GUPC has committed to complete the project in December 2015, 14 months behind the original schedule. The expanded canal will not open to maritime traffic until the first quarter of 2016 at the earliest because the locks are to undergo testing and canal personnel must be trained.
The Panama Canal expansion project is less than three-quarters complete.